Paying for Nature

Dow Chemical wants to put hard numbers on exactly how much the environment is worth to business

  • Siebe Swart / Hollandse Hoogte / Redux

    A Dow plant in the Netherlands recycles city water

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    The Flowers of the Forest

    More recently, scientists working for the U.N.'s Millennium Ecosystem Assessment and a just published study, "The Economics of Ecosystems and Biodiversity," have drilled down to find hard numbers on specific natural services. Scientists from the World Wildlife Fund (WWF) looked at a coffee plantation in Costa Rica and found that flowers near forests received twice as many bee visits and twice as much pollen as flowers far from trees — meaning that extra bee pollination was worth an additional $62,000 a year, or 7% of the farm's income. Razing those trees to allow cattle grazing — a common way to monetize forests in the developing world — would earn only $24,000 a year. "There's a library of similar case studies that show the economic impact of nature conservation," says Taylor Ricketts, WWF's director of conservation science. "We only value something when we measure it."

    Dow and TNC have already been involved in a smaller ecosystem-services project in São Paulo, which helped lay the groundwork for their new partnership. Some 9 million people in the city get their drinking water from the nearby Cantareira system in Brazil's Atlantic Forest. The forest has been under pressure from logging, agriculture and ranching for decades, and the resulting deforestation harms both water quality and the wildlife that depends on the forest. (Deforestation can lead to soil erosion, creating turbid water that requires more intensive and expensive treatment downstream.) Conserving the upstream land is a cheaper way of protecting downstream water quality than building costly treatment plants. New York City did this in the 1990s, purchasing or protecting over 70,000 acres (28,000 hectares) of its watershed upstate to avoid the need for a $6 billion treatment plant. So Dow donated $1.5 million through its charitable foundation to support a joint effort with TNC and São Paulo water utilities to restore 865 acres (350 hectares) of forest surrounding the Cachoeira reservoir. Not only will that money protect biodiversity, generate carbon credits and create green jobs for locals living near Cachoeira, but it should also cut the amount of sediment flowing into the water system by over 60%. That will benefit people and businesses in São Paulo — including Dow.

    The details of the larger collaboration between TNC and Dow are still being worked out, but Dow will donate $10 million to TNC over the next five years. In exchange, TNC scientists will apply scientific models, biodiversity analysis and ecosystem-services estimates to assess Dow's business decisions. If Dow decides to build or expand a plant, TNC will be able to advise the company about the economic value of the ecosystem impacts of those plans, positive and negative. The partnership will begin with pilot programs at three Dow manufacturing plants — at least one of which will be in the U.S. — but the ultimate aim is to make ecosystem services an essential part of Dow's entire business model. Numbers are hard to come by, in part because the collaboration is meant to generate fresh data on ecosystem services, but Liveris sees that $10 million as an investment in Dow's future — one he expects will pay off by preparing the company for the prospect of tighter environmental regulations and scarcer natural resources. "I think that in 10 years we'll look back and wonder why we didn't do this earlier," he says.

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